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Report Name:New Zealand Wine Sector Report 2020 Voluntary Report – Voluntary - Public Distribution Date: April 22,2020 Report Number: NZ2020-0006 Report Name: New Zealand Wine Sector Report 2020 Country: New Zealand Post: Wellington Report Category: Wine Prepared By: David Lee-Jones Approved By: Levin Flake Report Highlights: New Zealand’s wine grape area and wine production are forecast to continue to increase in 2020. The New Zealand wine industry estimates that grapes will be harvested from 39,935 hectares (ha) in 2020, up 2.4 percent on 2019. FAS/Wellington forecasts the total harvest at 439,000 metric tons (MT) of grapes, which would be 6.4 percent above 2019. Wine production is forecast at 316.3 million liters (mL) in 2020, also 6.4 percent up on 2019. Covid-19 has already had an influence on the 2020 grape harvest in New Zealand and it is likely to affect New Zealand wine exports. THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY Executive Summary: New Zealand’s wine grape area and wine production are forecast to continue to increase in 2020. The New Zealand wine industry estimates that grapes will be harvested from 39,935 hectares (ha) in 2020, up 2.4 percent on 2019. FAS/Wellington forecasts the total harvest at 439,000 metric tons (MT) of grapes, which would be 6.4 percent above 2019. Wine production is forecast at 316.3 million liters (mL) in 2020, also 6.4 percent up on 2019. Covid-19 has already had an influence on the 2020 grape harvest in New Zealand and it is likely to affect New Zealand wine exports. Despite some impact to the wine grape harvest by the onset of Covid-19 and the Government of New Zealand’s (GONZ) response to it, the 2020 harvest had been nearly completed by mid-April. Wineries have been deemed an essential service by the GONZ but have to observe strict hygiene and health protocols in order to be able to continue operating. They have been able to do this with minimal disruption to the initial wine making process. The wine sector has enjoyed steady growth over the last five years with productive vineyard area expanding by an average of 895 ha each year. NZ Winegrowers vineyard register data is estimating a further increase in the productive area for 2021 of 640 ha, but then expects expansion to slow in 2022 and 2023 to just 100 ha per year. Any reassessment by wine companies of demand prospects may even result in new plantings being delayed or stopped completely. Total demand (exports plus total domestic consumption) has exceeded total supply for four out of the last five years. This has meant year ending (December 31) inventories have been successively shrinking and are now forecast at the end of 2020 at only 40 percent of the next year’s demand. Even though the trend over the past five years has been exports increasing by around six percent annually, the lower wine inventory is expected to result in 2020 exports being relatively flat year-on-year. In addition, exports are expected to be disrupted by each importing countries’ responses to Covid-19. The Geographical Indications (Wine and Spirits) Registration Amendment Act was passed by the Government in December 2016 and came into force on July 27, 2017. There are now 21 geographical indications registered by groups and regions across New Zealand whose names are now protected by the legislation. Note: The Market Year is the same as the Calendar Year. Because of this “2020” or “2019” is used in the narrative and refers to both the Market Year and the Calendar Year. THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY Vineyard & Winery Production 2020 NZ Winegrowers vineyard register report estimates the 2020 total production area of wine grapes at 39,935 hectares (ha). This is 2.4 percent greater than 2019 and continues a trend over the last five years of two to three percent per year increases. These increased plantings are being driven by multi-national beverage companies and by large domestic wine companies. These have profitable supply chains from vineyard to consumer and have concentrated on the most profitable variety, Sauvignon Blanc. Sauvignon Blanc area has grown from 58 percent of total vineyard area in 2015 to 63 percent of the total area by 2020. This proportion is not expected to change over the next two years The overall expected average yield per hectare in 2020 is 11 metric tons (MT), 3.8 percent above 2019. This should result in total national grape production of 439,000 MT (6.4 percent above 2019). Apart from approximately 600 ha of vineyards that were hit with hail damage earlier in the growing season, in general vineyards are reporting average to above average yields. In most areas, the weather during the growing season has been conducive to normal to good fruit growth and development. The advent of the Covid-19 virus in New Zealand in mid-March 2020, and the subsequent Government lockdown and movement restrictions disrupted the smooth flow of the harvest. The industry scrambled to put in place health and safety protocols which allowed it to continue to harvest, do initial grape pressing and wine making. Fortunately for the industry, most grapes are machine-harvested now, which minimizes the staffing numbers needed. By mid-April the North Island (including the main growing area of Marlborough) completed the harvest. Down at the bottom of the South Island in the Otago region (representing approximately five percent of total area), the harvest will not be completed until mid-May. That region's harvest is being disrupted more by the Covid-19 lockdown response because a large proportion of the crop is Pinot Noir and it is hand-picked. The long standing ratio of 72 percent of the grape tonnage translating into wine volume is not expected to change in 2020. Thus total wine production for 2020 is forecast at 316.3 million liters (mL). This would be a 6.4 percent increase over 2019. 2019 The vineyard productive area in 2019 of 38,988 ha produced 413,000 MT of grapes. This was a 1.5 percent reduction on the 2018 tonnage. Although production area increased 914 ha (2.4 percent), this was not enough to offset a 3.8 percent reduction to average yield from 11T/ha in 2018 down to 10.6 MT/ha in 2019. As a result, the volume of grapes produced generated 297.4 million liters of wine, which was 1.4 percent less than 2018. NEW ZEALAND PRODUCING VINEYARD AREA BY GRAPE VARIETY (Hectares) 2016 2017 2018 2019 2020 2021 Est. 2022 Est. Sauvignon Blanc 21,400 22,230 23,102 24,605 25,160 25,559 25,625 Chardonnay 3,116 3,114 3,163 3,179 3,222 3,239 3,258 Pinot Gris 2,440 2,369 2,447 2,413 2,593 2,742 2,745 Riesling 753 721 707 52 569 568 568 Gewürztraminer 242 229 227 206 217 218 218 Sauvignon Gris 113 109 101 105 105 105 105 Viognier 119 97 94 89 85 85 85 Other White Varieties 270 251 251 720 204 208 209 Sub-Total White Area 28,453 29,120 30,092 31,369 32,155 32,724 32,813 Pinot Noir 5,519 5,572 5,588 5,549 5,642 5,710 5,728 Merlot 1,204 1,211 1,133 1,092 1,087 1,087 1,087 Syrah 430 439 432 440 437 440 442 Cabernet Sauvignon 256 249 250 216 219 220 220 Malbec 121 121 114 111 111 109 109 Cabernet Franc 100 91 97 91 93 93 93 Other Red Varieties 143 139 130 119 121 124 123 Sub-Total Red Area 7,773 7,822 7,744 7,618 7,710 7,783 7,802 Unknown Variety Area 0 1 237 1 70 68 69 Total 36,226 36,943 38,073 38,988 39,935 40,575 40,684 Source: New Zealand Wine Growers NEW ZEALAND GRAPE PRODUCTION BY VARIETY - NZ WINEGROWERS VINEYARD SURVEY (Metric Tons) 2013 2014 2015 2016 2017 2018 2019 Sauvignon Blanc 228,781 310,240 216,078 303,711 285,862 296,573 302,157 Chardonnay 27,184 28,985 27,015 29,162 26,843 26,371 25,729 Pinot Gris 22,042 23,880 19,707 24,892 20,755 22,824 20,953 Riesling 5,932 6,013 4,535 5,937 3,880 3,776 4,776 Other White Varieties 5,030 6,726 4,997 6,229 4,272 4,101 3,597 Total White Grape Tonnage 288,969 375,844 272,332 369,931 341,612 353,645 357,212 Pinot Noir 31,775 36,499 25,763 35,661 28,760 35,095 26,944 Merlot 10,076 10,756 9,397 9,321 7,714 10,623 9,240 Syrah 2,240 2,178 1,497 1,756 1,733 2,126 2,230 Cabernet Sauvignon 1,465 1,742 1,376 1,537 974 1,169 1,076 Other Red Varieties 1,908 2,679 2,022 2,150 1,616 1,741 1,862 Total Red Grape Tonnage 47,464 53,854 40,055 50,425 40,797 50,754 41,352 Total Survey Tonnage 336,433 429,698 312,387 420,356 382,409 404,399 398,564 Total Industry Tonnage 345,000 445,000 326,000 436,000 396,000 419,000 413,000 Source: New Zealand Wine Growers Future Planting Intentions – Industry Growth Projections Over the last five years the productive area of vineyards has risen by an average of 895 ha per year, a compound rate of 2.4 percent.
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